Lending rates are unlikely to come down, says new SBI chairperson

Newly-appointed Chairperson of State Bank of India Arundhati Bhattacharya feels that lending rates are unlikely to come down in the present economic scenario.

“If you look at where the inflation is currently…I don’t see any way how interest rates will come down. Not at least in the near future,” said Ms. Bhattacharya, while addressing her first press conference here on Tuesday after taking over as the first woman head of SBI .

“When the rates were increased, we did not increase any lending rates and absorbed the cost. So, there is no question of reducing our lending rates,” Ms. Bhattacharya added.

``This is no directed credit or there is no target given to achieve,’’ she said, adding “but we have projections on the kind of growth we can achieve.” She was referring to Government’s plans to pump-prime the economy with consumer loans on lower interest rates in the festive season.

Car loans

Responding to a question A. Krishna Kumar, Managing Director, SBI said: “Yes we have received some figures from the government to look at retail. We have made some plans and some tweaking to the existing products. As far as home loan rates, there is no scope for further cuts but we are looking at other products like car loans or others.”

He has also said that there is no introduction of new products but “we have outlined some cuts in the retail products and are awaiting government approval.”

On the rate cut in Marginal Standing Facility (MSF) from 9.50 per cent to 9 per cent by the Reserve Bank of India (RBI) on Monday, Ms. Bhattacharya said that, “Hopefully, we will revert to the repo. If there is stability in currency, then RBI might cut MSF rates.”

On corporate lending, she said that the SBI was now having lot of mid-corporates. They were on the verge of becoming large, but were currently seeing a lot of stress. “There they can do with a large stake sale, do with non-core asset sale. So, we are trying to ensure that the interaction with the investment banking arm and the mid-corporate section also gathers steam. Going forward, this is going to be very important. We feel that mid-corporates of our country need this help.”

She said that the other areas where SBI would like to bring about change is in leveraging IT. “This bank needs to have much on the IT front….We are in the process of launching a digital platform, so going forward we have to see how much we can leverage IT.” SBI is already using IT to monitor home loans and automobile loans, to track the status of the account. “We will also try and use IT (to track loans) in the agriculture portfolio that we have.”

Bad loans

Further, she said that the bank had taken all possible steps to plug and recover bad loans in the industrial sector. In terms of hard recovery, “we are making full use of provisions in the SARFAESI act, and, in specific cases, we are also filing winding-up cases against the defaulting companies.”

On whether she would continue the war on NPAs started by her predecessor, she said, “There is no way that anybody can say that the war on NPAs is over. If anything, the intensity is much more. We have to ensure that whatever was done, we do it better, and use a lot of other weapons in order to control the NPAs. In respect of that I would say we will be using IT (information technology) much, much more…we have not leveraged IT much.”

“We also intend to cut down the time span taken in resolving NPAs so that the turnaround time is much less. There is no doubt that NPAs remain a top priority till such time that stress lessens in our books…..The immediate quarter will not show huge improvement. The stress is still there, and, to that extent, we need to take measured steps.”